The New For-Profit Education Paradigm

In 2002, if you took a look at the lead generation landscape, it would have consisted of one main vertical - mortgage and one up and coming vertical, for-profit education. A dozen years later, the lead generation has undergone some radical transformations, from sector diversification to smart uses of technology to connect users with companies more efficiently.

Both mortgage and education exist, each, though looks very different today than before. On the former, we can argue that the recent financial crisis set the industry back. Consumer demand remains strong, but the legislation changes along with interest rate sensitivity, mean that companies cannot come close to fulfilling the consumer demand.

The changes that have taken place in the education space are equally fascinating, and the issues equally charged. It's a topic that I certainly have thought about since going from first-hand marketer to industry organizer. As the operator, I understand the marketer's maniacal focus on demand generation. As a semiofficial liaison for the industry, I understand the macroeconomic and political factors that have translated into not just increased scrutiny but inappropriate labeling of the industry.

I'll admit the slight stretch, but in many ways the business of education is not dissimilar from medicine. At their core, they are helping people live better lives. Like any large, complex, and emotionally charged sector, it is very easy for those on the inside and on the outside to form divergent opinions. And, it is possible for both to be correct. We are seeing it in medicine and certainly within the education sector.

For the uninitiated, the for-profit education sector contains both degree granting institutions and non-degree granting institutions. Of the two, the degree granting institutions are the ones that have garnered the most attention. They include institutions with no central campus, like University of Phoenix, that began with a specific focus on underserved students (working adults) to partnerships between your traditional schools and companies who help them leverage the brand to create an online, profit generating division of the "non-profit" school.

As I've learned by being around education industry, once you attach for-profit to something, it becomes charged, and even more so in education. The term is really a misnomer, and it's unfortunate. Currently, though, the discussion surrounding education has become so embroiled in partisanship that having a meaningful discussion about it can be difficult.

The government loan issue is a tricky one, and for better and worse, it makes innovation trickier because the degrees must conform to accreditation guidelines. It's the same issue surrounding all traditional education and the debate whether what is taught at traditional higher education institutions prepares people for the jobs.

Flying under the radar in some respects are the non-degree granting institutions - the scammy ones being mail-order fraud but the real ones providing skills training, e.g., truck driving. It's a segment of the market that has escaped debate primarily because it is typically private pay, that is, students do not qualify for government backed loans.

The under the radar area is anything but under the radar with respect to their impact, not just on the traditional jobs but some of the most in demand fields, programming and user design for example. Getting a job here does not require a full degree. It requires very specific skills, ones that are able be distilled and taught in a condensed period of time.

Programming was and is taught at degree institutions. With the volume of shared data online - most importantly libraries allowing programmers to quickly use pre-written code - the timeframe for learning has decreased and ability to do things with that training has taken a leap forward. Instead of four years, a person can spend three months of intensive training and be qualified enough to be the equivalent of a paralegal or better depending on the student.

These programs, referred to as immersives/intensives, seemingly have sprung up from nowhere. The first was General Assembly in New York, and today the field contains 70+ institutions, more than half of whom have formed in the past twelve months. Like any new education discipline, it just sort of happened, but the more business savvy realized that they were on to something.

The course fees are anything but trivial, averaging $10,000 or more for the three months. But, the current market demand for the skill and subsequent placement rate means that the $10,000 becomes a pretty calculable ROI for students, many of whom upon getting placed will earn back the money in the first year. Even if they earn back the money in three year's, that far exceeds the ROI of most other education.

What I saw watching the space was something akin to the education industry in the 90's and early 2000's. I had a scratch pad of a site that would compare the schools and aggregate the information to assist with the student discovery process. Two years later, not having actually done anything with that paper, I decided instead to back a startup that had the same idea. It is called CourseReport.com, and for hard core lead gen folks, it's directly approach will appear familiar, but instead of just aspiring to be a discovery platform, they want to help be an end to end play for the student.

It will be fun to see where this space goes. No doubt the "big guys" of for-profit education are already hard at work at looking into this space. More than anything, I hope this space will continue to do what it has started to - providing education that is actionable and employable.